Grain drain

Isle drivers keep paying more at the pump despite the required addition of crop-based ethanol to fuel

When the state began requiring that 85 percent of all gasoline sold in Hawaii contain 10 percent ethanol, there was some hope that the introduction of the grain-based renewable fuel would help ease prices at the pump.

What is ethanol?

Ethanol is a clear liquid made by distilling simple sugars produced from crops such as corn, wheat and sugar. Because ethanol is made from plants that harness the power of the sun, it is considered a renewable fuel. Fuel ethanol's chemical makeup is identical to that of alcoholic beverages, therefore it is denatured in order to make it unfit for drinking.

What type of ethanol is being used in Hawaii?

As of April 2, Hawaii law required that 85 percent of all gasoline sold in the state be mixed with 10 percent ethanol. The blend, known as E-10, is available at all gas stations in the state.

Is it safe for my car?

All automobile manufacturers approve the use of E-10 in vehicles sold in the United States. Because up to 10 percent ethanol is a normal component of today's automotive fuel, it is accurate to refer to E-10 as "regular gasoline," "midgrade gasoline" or "premium gasoline," based on its octane rating.

Tax credits available for blenders were expected to bring savings in the short term.

Over the long run, prices are expected to come down as ethanol extends the life of existing oil supplies, lessening the dependence on imported fossil fuels, which the state relies on for 90 percent of its energy needs.

All of that might still happen.

But since April, when Hawaii's 10 percent blending mandate began, isle gas prices have steadily risen. For the past two months, prices have hovered near the mid-$3 range -- the highest in the country and well above the national average.

"It's a transition phase," says Maria Tome, an alternative fuels engineer with the state Department of Business, Economic Development and Tourism. "It's really hard to take a short-term transition to something that's just basically an additive to gasoline, and say, 'Well, this is it, this is the end.' It's not. It's kind of the first step."

If you haven't noticed the yellow "E-10" stickers affixed to gas pumps, ethanol blending in Hawaii is well under way.

Like virtually everywhere else -- Hawaii was the 42nd state to adopt blending requirements -- ethanol is being put to use as part of an overall strategy to reduce dependence on foreign oil and to start using cleaner-burning fuels.

Turn on the TV, listen to the radio or page through a magazine and you're likely to come across ads by automakers, even oil companies, touting a new generation of vehicles and fuels that will help end our nation's "addiction to oil."

But will it?

Nationwide, ethanol prices have never been higher and there is a growing chorus of detractors who say biofuels threaten our nation's food security, that they aren't efficient enough to compete with traditional energy sources and will have little, if any, ability to displace oil consumption.

"I think people are seeing that there's severe limits to how far we can take this and getting a little bit more realistic," said David Fridley, a staff scientist in the Energy and Environmental Division at the University of California's Lawrence Berkeley National Laboratory. Fridley is a frequent lecturer on what he calls the "myth of biofuels."

Tome acknowledges that ethanol and other biofuels are not the sole answer, but she says critics aren't looking at the big picture.

"You can't just tell people this is going to save the world," she said. "But in general, is it good to be heading in that direction (to develop alternatives)? Or is it good to just sit there and say, 'We'll wait for a crisis and then we'll respond in a panic mode.'

"It looks like it's rather inevitable, so to position yourself for a gradual, orderly transition is something that seems to make sense."

Supporters of ethanol in Hawaii note that most of the criticism focuses on fuels derived from corn. The local industry is positioning itself to take advantage of the islands' ability to grow sugar.

Next month, the U.S. Department of Agriculture is expected to issue a long-awaited study on the viability of sugar-based ethanol. Keith Collins, the USDA's chief economist, said that the soaring demand for ethanol and Brazil's successful track record with sugar-based ethanol make it worth discussing sugar-based ethanol here.

Although sugar is widely considered a more efficient feedstock than corn and wheat, some, like Fridley, question ethanol's viability in general, predicting that such fuels will only be able to displace about 20 percent of the nation's oil consumption.

"One very big problem is the scale that were talking about," Fridley said. "Currently the world consumes about 85 million barrels a day of oil."

There's also the issue of how much energy is needed to make the fuels.

"You get very little net energy out of the other end," Fridley said.

In other words, it takes energy to make energy, and you need more energy to make ethanol than you do to make gasoline and other refined oil products.

Although the tradeoff for sugar is better than corn, "you still end up requiring a tremendous increase in the input energy required to make these fuels," said Fridley. "That, to me, is kind of a backward step if your goal is to actually try to do something about our energy prices."

And, just like corn, sugar and other feedstocks such as molasses and sweet sorghum -- which at least one ethanol producer in Hawaii plans to use -- require land and water, while the plants to convert the crops to ethanol still need to be powered, too.

"Like anywhere else in the U.S., Hawaii would still have to subsidize production of ethanol by other kinds of energy," Fridley said. "You would be dedicating a certain amount of oil-based electricity generation.

"You still have to supply the other fossil fuels to produce it."

But Hawaii supporters of ethanol say it is worth pursuing as part of an overall strategy that also includes better city planning and improved public transportation to get people out of their cars altogether.

Policymakers also will have to be smarter about how water, land and other natural resources are managed in the future.

"These are important elements for our sustainability for Hawaii," said Sen. Russell Kokubun, chairman of the Senate Water, Land and Agriculture Committee. "I think ethanol will provide a great percentage of our fuel needs, but I don't necessarily think it will be all of it.

"Let's not put all our eggs in one basket -- diversification is a real key to a bright future for us."

For now, the biggest concern for most is what ethanol is doing to the price of gas.

When blending began in April, part of the run-up in prices was due to the state's wholesale gasoline price cap that was repealed in May. As crude oil prices exceeded $70 a barrel, gas prices went up in mainland markets to which Hawaii's prices were tied.

Critics of big oil argue that the savings generated by the tax credits are simply being eaten up by the companies.

Officials from Chevron and Tesoro, which operate the state's two oil refineries, point out that the blending mandate has increased their costs, requiring them to upgrade their refineries and add infrastructure such as storage tanks at neighbor island facilities.

There also is the cost of bringing the additive to Hawaii. Right now there is no ethanol being produced in Hawaii.

The first plants are not expected to come online until the second quarter of next year, forcing refineries to import about 100,000 barrels of the fuel each month from sources in the Caribbean, South America, Asia and the U.S. mainland.

That cost, oil companies say, is perhaps the biggest reason for the rise in prices.

Ethanol prices have reached all-time highs this week as fuel companies have driven up demand.

U.S. ethanol averaged $3.67 a gallon on Friday, up from $3.62 a week ago, according to data compiled by Bloomberg News Service. The U.S. average has increased for 12 consecutive weeks and is up 54 percent since the end of March.

The high cost of ethanol negates any savings from the 51-cent-per-gallon tax credit available to ethanol blenders, the oil companies said.

Costs for refiners are expected to come down once the local ethanol supply comes online.

"We'll see, once we get the local production online, as to how it's going to play out," Tome said, adding that it is hard to compare Hawaii's transition to ethanol with other states.

Many states have blended 10 percent ethanol for years, and now are shifting to an 85 percent blend known as E-85.

When other states began their programs, "You didn't have the global increase in the cost of oil that we're seeing now and the East Coast transitioning into the fuel and things are all over the place now," Tome said. "It's a much more volatile environment in which were having our transition."

The Associated Press and Bloomberg News Service contributed to this report.

LEARN MORE ABOUT ETHANOL

As the blending of ethanol with gasoline has gotten underway in Hawaii, Anglin has been relied on by the state to help answer questions and concerns that have been raised by motorists, mechanics and others.

"Most people think that they have tremendously reduced gasoline mileage, when in fact they didn't know what their mileage was to begin with," said Anglin, now retired and living in Honolulu.

With all of the pre-existing conditions that can affect a car's fuel performance, such as tire inflation, vehicle weight, spark plug maintenance and dirty air filters, Anglin says it is unfair for motorists to automatically assume that ethanol is to blame.

"There's a different mindset, I think," Anglin said. "I think it gave a lot of people the incentive or the opportunity to be concerned about what their vehicle was or was not doing under conditions that otherwise they wouldn't have even considered."

Although ethanol-blended gasoline can cause problems if water gets into the fuel tank, Anglin said there has been just one such case that he's been made aware of since ethanol was introduced into the fuel supply in April.

Not everyone agrees with him.

"You get a 35 percent energy loss between ethanol and gasoline," said David Fridley, a staff scientist in the Energy and Environmental Division at the University of California's Berkeley National Laboratory. "So if you're blending in just 10 percent, then you're probably getting 3 to 4 percent energy loss in the same gallon, so your mileage without question will be lower."

An engine would have to be designed to run solely on ethanol-based fuel in order to achieve maximum efficiency, Fridley said.

The state attempted to address concerns earlier this year with a workshop aimed for those involved in the state's oil and gasoline industry.

But Maria Tome, an alternative fuels engineer with the state Department of Business, Economic Development and Tourism, acknowledged that it probably is not possible to convince everyone, noting that some mechanics have challenged the notion that ethanol has negligible effect on a car's performance.

"It's really a vehicle-specific and a mechanic-specific thing," she said. "You can set up these training things and invite the mechanics to attend and to discuss these things, but then it comes down to the individual who maybe didn't hear about it or has heard other things.